Citywealth spoke to Roger Clarke, managing director and head of the capital markets team at IPSX, the world’s first regulated property stock exchange.
IPSX enables investors to own shares in single real estate assets, previously only available to the largest institutional investors. Clarke tells Citywealth about the IPSX journey so far, their partnership with Carbon Intelligence and why now is the right time to invest in commercial real estate.
Tell Citywealth’s readers about your role
I am Managing Director and head of the Capital Markets team at IPSX. Our team is the main point of contact with the real estate and broader financial markets. We engage with owners of real estate who may want to list on the exchange, and we speak extensively to all types of investors about the new possibilities IPSX could generate for them.We also interact with the financial, legal, real estate and accounting advisers who together make up the advisory network that is necessary for this new exchange.
What should investors know about IPSX?
IPSX makes real estate more accessible to investors. It is the world’s first regulated stock exchange dedicated to the initial public offering and secondary market trading of companies owning single institutional grade real estate assets and multiple assets with commonality. Investors can buy and sell shares in IPSX listed companies as simply as they would with shares in a FTSE 100 company, through their stockbroker or retail platform. In addition, shares listed on IPSX are ISA and SIPP eligible.
Previously, owning shares in single real estate assets was only available to the largest institutional investors. IPSX provides investors the opportunity to access the high-yielding income from real estate but avoids the risks of investing in an opaque property fund.
The Financial Conduct Authority (FCA) has approved IPSX as a Recognised Investment Exchange providing investors with the opportunity of investing directly into operating companies that own stabilised commercial real estate assets, which are largely fully let and generating a net distribution from the rental income.
What are the challenges that UHNWs and family offices currently face when it comes to investing in property? How can IPSX solve these problems?
Until now, there have been limited single Commercial Real Estate investment options available for the majority of UNHWs and family offices. Owing to high minimum investment thresholds, the compelling investment characteristics of individual real estate assets have previously been available to only the largest institutions and sovereign wealth funds. Investment routes for UNHWs and Family offices have focused around purchasing more opaque fund structures.
IPSX provides retail investors with the opportunity to take advantage of the fundamentals that real estate offers, such as strong yield, uncorrelated returns and lower volatility than other asset classes. FCA recognition gives investors the confidence that the Exchange is operated to the highest professional standard and the issuers will meet high transparency standards.
What has been your proudest moment in the IPSX journey so far?
The listing of Mailbox REIT was the proof of concept for IPSX.With this listing, we started the process of opening-up this £1 trillion asset class to a much wider group of investors. With a pipeline of more than 30 buildings (3 expected to list by the end of the year) IPSX is poised to grow quickly.We are on the verge of fulfilling a vision that many in the real estate industry have harboured for more than 50 years.That would be an achievement to be proud of.
What’s next for the exchange?
We look forward to welcoming more issuers onto the exchange and providing investors with compelling reasons to add single real estate assets to their portfolios alongside equities and fixed income.
Tell us more about the partnership with Carbon Intelligence.
The aim of our relationship with Carbon Intelligence is to supply real estate assets admitted on the exchange with guidelines on how they should be reporting and managing both embedded and operating carbon emissions.We see it as important to help real estate owners and our issuers optimise the efficiency of their buildings and significantly reduce the amount of CO2 that buildings produce. Investors need actionable data to help benchmark a building’s energy efficiency performance in order to make informed investment decisions. This cannot be tackled without the involvement of asset owners and investors. Our mission as a new stock exchange is to make asset reporting ever more transparent, helping investors understand exactly how assets that they are investing in are performing.
How does ESG apply to the commercial real estate market?
ESG is a fast-evolving arena, bringing together regulations and guidance from a wide range of government bodies, multinational institutions, trade bodies and environmental agencies. We believe it is prudent now for commercial real estate asset owners to develop short, medium, and long-term ESG strategies to help future proof buildings and protect against compliance, valuation, and obsolescence risks. In partnership with Carbon Intelligence, we have produced a guide to ESG for real estate owners that will be updated on an annual basis to ensure it remains a useful and relevant tool for issuers on the exchange.
Why is now the time to invest in commercial real estate?
With yields on government bonds at historic lows, suppressed by central bank purchases, investors’ appetite for yield have seen them drift into riskier asset classes.Commercial real estate has long been regarded as an asset class with a history of delivering attractive income yields, with performance largely uncorrelated to equities or fixed income. Access to this asset class is now available for all.